IMF raises U.S. economic forecast as other regions lag

The U.S. economy is on track to grow faster this year than expected, the International Monetary Fund said Friday, citing a strong labor market and an acceleration in investment.

The IMF forecasts US economic growth of 2.7% in 2025 in its latest World Economic Outlook report, compared to an estimate of 2.2%. This contrasts sharply with reduced growth forecasts for the euro zone, which the fund attributes largely to weakness in the manufacturing sector and increased political uncertainty.

“The big problem is the divergence between the United States and the rest of the world,” Pierre-Olivier Gourinchas, the IMF’s chief economist, said in a call with reporters this week. “We have stronger potential output growth in the United States than before the pandemic, and weaker potential growth in other regions, such as the eurozone or China.”

The fund’s new economic forecasts released Friday build on its October analysis, which showed that fears of a post-pandemic global contraction appear to have been dispelled, although growth remains sluggish in many countries. IMF economists expect global output to grow 3.3% this year and next, according to the updated report, slightly above the fund’s previous projections.

But newly elected governments around the world are increasing economic policy uncertainty, posing risks that could change the trajectory of the global economy in the months to come, the IMF warned.

These contingencies are particularly acute in the United States, where tax cuts, deregulation, tariffs and immigration restrictions proposed by the new Trump administration could trigger inflation. All of these proposals have one element in common, Mr. Gourinchas said: They are poised to increase price pressures.